Suncor Energy Inc (SU) 0 Q0 法說會逐字稿

Good morning, ladies and gentlemen.

Thank you for standing by.

Welcome to the pro forma information conference call.

At this time, all participants are in a listen-only mode.

Following the presentation, we will conduct a question-and-answer session.

(Operator Instructions).

I would like to remind everyone that this conference call is being recorded today, Wednesday, October 7, 2009 at 7:30 a.m.

Mountain Time.

I would now like to turn the conference over to Mr.

John Rogers, Vice President of Investor Relations.

Good morning, everyone, and thanks for listening in to this conference call.

We have put out yesterday a pro forma set of statements that went into the second quarter of this year.

The purpose of the statements is to help you position your models to give you a little bit of an information in terms of what the numbers would have looked like had we been combined at the end of the second quarter, begin to position yourself as you get ready for the third quarter.

There is still some work that's being done on those numbers and I will try and point out to you, but the numbers and the divisions that I have given you I think are fairly close to what we are proposing to be our disclosure segments of disclosure information that we will be putting out as we put out the third-quarter numbers.

One thing I can't do today is speak to the third quarter, so I won't really entertain any questions around the third quarter and the potential results that will come out on the third quarter.

That will come out with the news release that we are going to be putting out on November 6.

It is a little later this quarter than normal.

We just felt we need a little more time with the merger to do that, so that's why it is a little later, about a week later than we would normally put it out.

So what I will do is very quickly walk you through the information that was available to you and hopefully most of you have pulled it off of the website.

I do have to mention that there is some forward-looking information here, not too much, but there is some forward-looking information and the lawyers have put the necessary forward-looking information statements in the presentation.

You will see those two pages.

The slide I am now looking at is slide 3, which is the pro forma segmented statement of earnings and it is probably what you probably would have expected us to do under the Oil Sands.

We have combined Syncrude and MacKay River in the Oil Sands segment now and that is what it will potentially look like going forward.

The Natural Gas division is just the combination of the two divisions.

Refining and Marketing includes both the legacy Petro-Canada side and the Legacy Suncor side in it.

On the East Coast, obviously Hibernia, White Rose, and Terra nova are included there and on the international side, it is Trinidad, Libya, and Syria are included in there.

The one change, as we did note in the segments, is we did move corporate -- into the corporate energy market in trading, which we used to have under the R&M division, but we've now moved it over to the corporate side.

So you can -- the numbers will now be recorded there.

We are still working -- one of the areas we are a little concerned about as we put the pro forma out is, in the DD&A number, that is still a very tentative number.

I would expect that number would be quite a bit higher than we have here in the statements.

We have not fully accounted for the transaction from Petro-Canada and the assets fully valued, the PP&E assets.

And so of course, that will have an effect on DD&A.

So we are very tentative on that DD&A number right now and we will really have to wait till we put out the third-quarter number before you will have a real good indication of what DD&A or the new entity will look like going forward.

So that was the comments I was going to make on slide 3.

All the other slides are basically the backup information that we always put in, the supplemental information for you.

Slide 4, of course, will have the normal information around operating summary for the Oil Sands.

You can see in it that we're going to split out Syncrude separately for you.

Where there are dashes, it's not because we didn't know the numbers, it's just that we haven't previously disclosed those numbers, so we chose not to put new information in here.

It was more a matter of combination of information that we had previously published.

So you can see the Oil Sands operating summary.

I hope it's about what you would have expected it to be.

That would be slide 4.

Onto slide 5, same thing.

With the cash operating costs, we will split them between those that we operate and the Syncrude numbers will be displayed that way.

The Natural Gas Division as we go on to slide 6, you will see the production.

We will split it by the various regions that we have in the corporation and as you know, we are going through, as we previously announced, a divestiture program in the Natural Gas division, so those numbers will shrink from where they are.

Moving on, slide 6 and 7, straight through that.

Onto the East Coast, splitting out production for you in slide number 8 in terms of where Terra Nova, Hibernia, White Rose, so total production and the average sales price for the barrels that we have received there.

Aim to the international for now, and we may think about changing that disclosure on the international side as we go forward and may look at possibly including the Buzzard field and the other North Sea fields in the offshore.

But for now, we're going to keep the international assets basically the way that the legacy Petro-Canada Corporation had done that and keep that all under international.

So Buzzard, other UK, Netherlands will be split out for you, as will Libya and Trinidad and Tobago.

The reason again you have dashes in there as opposed to the actual numbers is that not all of these numbers have been previously disclosed, so we didn't want to start disclosing separately things at this time.

So we'll just give you an idea of what it will look like.

The same thing with refining and marketing.

We couldn't split out for now the geographic areas.

I would suspect for now that we will have western Canada and Eastern Canada very similar to the way that Petro-Canada had previously disclosed that, but we couldn't go through that split-out for you.

On slide number 11, netbacks split between Oil Sands, Natural Gas and East Coast, so we are going to be putting netback tables in for you.

I think this is kind of moving in the right direction and we will be able to give you by division netbacks.

So hopefully that will help you as you look through the various economic parameters of the Company.

Moving on to slide 12, I think you are quite used to this kind of format.

We didn't update actually.

We're just -- the royalty department right now is in the process of updating the royalty rates and so we will give you updated numbers in the third quarter.

As for the other numbers and the sensitivities around the other numbers, those too will be updated and we will make sure you have the right numbers into the third quarter.

So you can rest assured we will continue to give you, in the format you have been used to, royalties and projected royalties going forward.

And also the same thing on slide number 13 for the East Coast, you will see those kind of numbers.

Under slide 14, the estimated income tax, this is updated actually for the third quarter going forward, some new pieces of information in here.

You can see the estimated tax rates for 2009 for Canada, International, and overall.

And the estimated cash tax for 2009 has moved for the combined entity to about CAD900 million to CAD1 billion in total and we are reasonably comfortable that that is the right number for you.

So that, in a nutshell, is what the pro forma looks like for the Company.

It should give you a pretty good indication of what our disclosure is intended to be.

Hopefully it gives you a pretty good basis for developing your models going forward.

I was a bit remiss at the front.

I should have mentioned I have in the room here with me Helen Chan and Tim Mah.

Helen is from the Investor Relations department here at Suncor and Tim is from the Controllers department.

If you haven't had a chance to do some work with Helen, Helen has developed our own model internally for Suncor and the purpose of that is to help you in your modeling and help get that sorted out.

So Helen is a great resource for you going forward in terms of helping you with your modeling.

And she is sitting here shaking her head, but Helen is quite adept at modeling and I think you'll find her to be a good resource for us.

And Tim, of course, has always been very helpful to us, making sure we have the right accounting information.

So that is all I was going to say on a prepared basis for the conference call.

The three of us would be happy to entertain any questions that you do have.

Again, we can't entertain any questions around the potential results in the third quarter, but we are happy to help you with anything in terms of discussing the disclosure or any specific -- this is the one time you actually get to ask us some modeling questions on a conference call.

So Theodora, I think we're ready for any questions that there may be.

(Operator Instructions).

Mark Gilman, Benchmark Company.

It seems like there will not be a full in situ income statement.

Is that correct?

Yes, that is correct.

If you are looking for the separation of MacKay River and Firebag, we had actually chose to co-mingle them together, so you will get the specific information, but we are not going to give you a or don't intend to give you a full income statement on in situ.

Part of the issue is in situ is just an integrated part of the whole Oil Sands operation, so it's a little difficult to begin to split that as you put transfer prices in and things like that.

So for now, we just give you the specific production numbers and the costs associated with in situ.

.

Okay, thank you.

And your reported Oil Sands production numbers on a monthly basis, do those include all of MacKay production volumes or just your fee for service?

The production numbers that we actually give you on a monthly basis do not have anything to do with actual bitumen.

What they have to do with is output that comes out of the two upgraders that we have at Oil Sands.

So those are the numbers that we are actually reporting.

If they got their feed from MacKay, if they got their feed from Firebag, if they got their feed from the mine, then that's where the upgraders got their feed, but we report on an upgrader basis as opposed to a bitumen feed basis.

Okay, okay, thank you very much.

Peter Ogden, National Bank.

Good morning.

Just on slide 5, a quick question.

You have your cash operating costs and total operating costs for Q2 at CAD32.95.

That went up from Q2 levels, but your in situ went actually down from Q2 levels.

Is that -- is the only difference between Q2 and Q3 the inclusion of MacKay in those numbers?

Yes.

Okay, so MacKay River gets included in the in situ side and it drops the operating costs in Q2, but how did the overall operating costs go up?

Syncrude has a much higher operating cost during the quarter.

Okay, so the total, the operated includes Syncrude as well?

Yes, I think we actually have -- do we --?

No, I don't think so.

Peter, we will have to look at that.

I didn't realize it went up substantially from that, so let us have a look at that.

We'll actually get back to you on that question.

That's a good question.

Yes, they just went in two different directions and I was just curious if something other than MacKay was being included in that, so if you could get back to me on that, that would be great.

That will give us a chance to have a look at it and we will get back to you directly.

All right.

And on Q3, are you going to provide some tax guidance for 2010 when you release Q3 do you think?

To the extent that we can, obviously, we will.

To the extent that we can't -- I mean part of the issue is we have a lot of moving parts in terms of where the tax numbers are.

That would be my goal to do that, but on the other hand, I can only give you what I can realistically give you.

I had enough trouble quite frankly getting you the cash tax numbers for 2009, so if I can get you 2010, believe me, I will.

Right.

On November 6, you plan to release your Q3.

Are you going to release the updated kind of go-forward plans at that time or is that going to come later?

Well, that will come later.

The Board doesn't actually meet till the week after November 6.

I see.

So we won't be able to put out the capital numbers or talk about the future growth until after the Board meeting.

They will approve the business plan and the capital plan, so it will be the week after.

The next week is when the Board meeting is, so will be the week after that when we actually get to talk about the future of the Company.

Perfect.

Thanks very much.

(Operator Instructions).

Carrie Tait, The National Post.

Hi.

Why did you separate Syncrude out?

I'm sorry, Carrie, could you ask me that question again?

Sorry, why did you separate Syncrude from the Oil Sands division, break it out all by itself?

I think that's -- what we're trying to do is we operate our own divisions.

We operate the Oil Sands division and Syncrude is operated separately, so what we are trying to do is give people the ability to look at the Oil Sands and look at the Suncor operations and look at the Syncrude operations separately.

Of course, they also get the information on Syncrude from the other partners within Syncrude, so we are just trying to give people more information.

We see Syncrude as a pretty important part of our overall operation, but we want to give people the ability to actually see the results of the Suncor operations and assess the results of the operations that Suncor is a partner in, and that would be the Syncrude side.

Great.

Thank you.

Mr.

Rogers, there are no further questions at this time.

Please continue.

Okay, perfect.

Thanks, everyone, for listening in to this quick conference call.

It was kind of nice.

Helen and I will be around all week -- today, tomorrow, and Friday -- to help you with any specific modeling questions that you might have.

We are away next week.

I am off marketing and Helen is off on her honeymoon next week, so if you do have -- do need us, it would be good to get a hold of us either today, tomorrow or Friday to help you with your modeling questions going forward.

But thanks, everyone, for listening in and hopefully we will speak to you soon.

Ladies and gentlemen, this concludes the conference call for today.

Thank you for participating.

Please disconnect your lines.